What is a small company?
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Definition (Section 2(85) of the Companies Act, 2013): A Small Company is a private company that satisfies both of the following conditions: Paid-up share capital does not exceed ₹4 crore; and Turnover as per its last Profit and Loss account does not exceed ₹40 crore. 🆕 (As per MCA Notification dateRead more
Definition (Section 2(85) of the Companies Act, 2013):
A Small Company is a private company that satisfies both of the following conditions:
Paid-up share capital does not exceed ₹4 crore; and
Turnover as per its last Profit and Loss account does not exceed ₹40 crore.
🚫 Exceptions – The following are not considered Small Companies:
Even if they meet the capital and turnover limits, the following cannot be classified as a small company:
A public company
A holding or subsidiary company
A company registered under Section 8 (non-profit)
A company governed by any special Act
Why Classification Matters?
Small companies enjoy certain benefits and compliances relaxations, such as:
Exemption from cash flow statements.
Lesser penalties for defaults.
Simplified board meetings and annual returns (can be signed by one director).
No need for rotation of auditors.
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